In a resounding victory for the tobacco industry, an appeals court ruled late last week that the U.S. Food & Drug Administration has no authority to regulate tobacco or its marketing.

The decision, by the U.S. Court of Appeals for the 4th Circuit, Richmond, Va., likely leaves the fate of the FDA's current advertising curbs to the Supreme Court and intensifies pressure on Congress to return to the tobacco issue. The government last week said it will ask all the judges of the appelate court to rehear the case before asking the Supreme Court to act.

COMPLETE VICTORY FOR TOBACCO

"It is pretty much a complete victory for tobacco lawyers," said Bill Novelli, president of the Campaign for Tobacco-Free Kids. "It creates a statement where the public wants tobacco regulated but the FDA can't do it. The only effective solution is congressional legislation. The pressure will build on Congress to face this."

Washington state Attorney General Christine Gregoire, who is leading talks aimed at settling state suits (see related story on Page 18), said one reason attorneys general had proposed a congressional deal a year ago was concern about the FDA's authority to regulate tobacco.

"We were concerned about the outcome of this," she said. It was unclear at press time how the appeals court decision would impact those talks.

The federal appeals court concurred with tobacco companies' arguments that the FDA has no legal authority to regulate tobacco through rules. By declaring tobacco "unsafe" in its rules, the agency lost any ability to regulate tobacco as a drug.

The petition to the federal appeals court was filed following an April 1997 ruling by District Court Judge William Osteen in Greensboro, N.C., which found the FDA had no authority to issue regulations on tobacco advertising but could regulate tobacco and restrict access to it in ways that would have affected point-of-purchase displays in stores.

AD GROUP CHALLENGES

Advertising groups, which had challenged the FDA rules on the grounds that restrictions on advertising were unconstitutional, crowed about the new ruling.

"We always felt we would win on jurisdiction. Now two courts have confirmed that the FDA does not have the authority" to issue ad regulations, said Dan Jaffe, exec VP, Association of National Advertisers.

MARKETERS PLEASED

Tobacco marketers involved in the suit in a joint statement said they were pleased by the ruling.

Attorneys last week said the court decision could considerably delay any tobacco ad restrictions gained through lawmaking from taking effect.

The FDA's curbs now will likely face a Supreme Court challenge over the agency's authority. The FDA ad curbs would have limited outdoor signs, barred brand name sponsorships, stopped giveaways and prevented the use of imagery in magazine ads.

If the Supreme Court were to reverse the decision, another lower court battle over constitutional questions would likely ensue before FDA rules would ever take effect. Further, the 4th Circuit Court's decision may nullify the FDA's rule-making process, forcing a new process if Congress gives FDA authority.

DISSENT

The victory was not without controversy.

Judge K.K. Hall, the dissenter in the 2-1 decision, wrote, "The district court erred in ruling that the FDA cannot, as a matter of statutory law, restrict the advertising of tobacco. . . . Minors are particularly vulnerable to Madison Avenue's exhortations, plastered on racing cars and outfield fences, to be cool and smoke, be manly and chew, and the FDA found `compelling evidence that promotional campaigns can be extremely effective in attracting young people to tobacco products.' "